Tag: Ivo Pezzuto

The “Miracle” Still Goes On For Someone…

This guest post is by Ivo Pezzuto, Professor at the Swiss Management Center University (SMCU) in Zurich, Switzerland, and an experienced observer of the global financial services industry.

I share the analysis of most economists and observers that the following are among the main causes of the current global financial crisis:

  • the U.S. Federal Reserve’s low interest rate policy at the beginning of the last decade, the resulting credit euphoria of both lenders and borrowers;
  • the more ”relaxed” credit initiation and control policies and procedures of lenders;
  • the “exotic” innovative features of some mortgage lending products;
  • the overwhelmingly optimistic view of future house prices which prevailed in the market that has led to both the housing and the mortgage lending bubbles;
  • the widespread use of badly controlled (OTC trading) innovative financial engineering tools (i.e., derivatives, securitizations, CDS, CDO, MBS, RMBS, CLO, etc.).
  • Imbalances, exchange rates and interest rates differences between the US and other emerging economies and the resulting speculative trading and arbitrages. Continue reading “The “Miracle” Still Goes On For Someone…”